Best and worst cities for credit scores
Of 20 metro areas surveyed, Minneapolis and Boston fly
high while Dallas and Houston lag. How does your city stack up?
By Hilary Smith
Whether your credit score is
good, bad or somewhere in between, have you ever wondered how it stacks up
against your neighbors' -- collectively, at least?
If you live in Minneapolis, you’re rubbing elbows with the nation’s
best credit scores, according to the most recent data from Experian,
one of the three major reporting agencies. You and your neighbors have the
highest average credit score of 705. Boston residents rank a very close second, with an
average credit score of 704.
Of the 20 major metro areas that
Experian ranks, Dallas and Houston come in at the
bottom of the list, lagging more than 50 points behind Minneapolis. The Texas cities have average credit scores of 650
and 652, respectively.
"The biggest driving factor
to a score is delinquency payments or payment history,” says Arlene Dang,
manager of analytics for Experian. “The difference
between the lower-range states and the higher-range states … is really the
number of late payments.”
Dang says that overall, scores
went down two to three points
from the same time last year. Individual scores can range from 330 to 830, with
a higher score indicating lower credit risk. A score in the 700s or higher is
excellent, around 650 is a midrange score, and anything lower than 600 “has
room for improvement,” she says. The national average score is 676.
How does your city rate?
|
Big-city credit scores
|
|
Metro
area
|
Score
|
Metro
area
|
Score
|
|
Minneapolis
|
705
|
Detroit
|
675
|
|
Boston
|
704
|
Denver
|
674
|
|
Washington, D.C.
|
691
|
Tampa
|
672
|
|
Cleveland
|
689
|
Miami
|
671
|
|
Seattle
|
688
|
Orlando
|
671
|
|
New
York
|
686
|
Los
Angeles
|
668
|
|
Philadelphia
|
686
|
Atlanta
|
667
|
|
San
Francisco
|
685
|
Phoenix
|
657
|
|
Chicago
|
679
|
Houston
|
652
|
|
Sacramento
|
676
|
Dallas
|
650
|
|
Note: Experian
collects data monthly from a representative sample of 3 million U.S. consumers' credit profiles. Credit scores
are for February 2005. Further details can be found at www.NationalScoreIndex.com.
Credit confidence lacking
The Experian-Gallup
Personal Credit Index, a separate survey launched in March 2005, indicates that
consumers are feeling increasingly less confident about their future credit
situation. The index is based on a monthly nationwide survey of approximately
1,000 adults that measures level of debt, monthly payment burden, credit rating
and debt extension capability. The index is currently at 82, down from March’s
benchmark score of 100.
“A lot of factors point to the
whole credit arena deteriorating,” says Dennis Jacobe,
chief economist for The Gallup Organization.
So how does each state stack up? Check
out our interactive credit-score map to find out.
Record gas prices (and rising
prices in general), increasing interest rates, concern about stagnant wages and
a recent weak jobs report are all negatively impacting consumer views on
personal credit. Young consumers are the most at risk for financial problems
because they usually don’t have a track record for managing credit.
“These young consumers also may
have financial obligations with variable interest rates which allow them to
afford the payments. However, any rise in interest rates will increase their
payments, making it more difficult for them to meet their obligations,” says Jacobe.
He warns that all consumers
should be careful about what other kinds of variable credit they get in to.
Checking out your own credit file
If you haven't reviewed your credit file, on
which your score is based, it's advisable to find out where you stand. Credit
scores are used by lenders when evaluating your creditworthiness. Insurers,
employers and landlords also use the scores to screen applicants.
The new fair credit law
guarantees you will be able to get a free yearly look at your credit report. Click here to read more about how to get a
free file disclosure from all three bureaus: Experian, Equifax
and TransUnion. Currently, free reports are
available to those living in the West and Midwest. They will be available in the Southern
states June 1 and in the Eastern states on Sept. 1.
Typically, a credit report
includes identifying information about you, such as your name, address, Social
Security number and birth date. The report may also list any credit accounts or
loans opened in your name, along with your payment history, account limits and
any balances you owe.
If you’re young or newly arrived
in the United States, you may not have a report or it may have
little information. If you’ve had credit problems, your report will list them.
How to fix any errors or omissions
Some credit reports include errors -- accounts
that don’t belong to you or that include out-of-date or misleading information.
You should read through each of your three reports and note anything that’s
incorrect.
Negative information, such as
late payments, delinquencies, liens and judgments against you, should be
dropped after seven years. Bankruptcies can stay on your report for up to 10
years.
Once you have a list of
problems, ask the bureaus to investigate errors listed on their reports. You
can use the form that came with your report if you received it by mail, or use
the Web link if you accessed your report on the Internet.
In general, the ways you improve
your credit score are the same in any case:
- Correct errors.
- Pay your bills on time.
- Pay down your debt.
- Apply for credit sparingly.
Additional information is located on these pages:
- Charge Off - How creditor "charge offs" affect consumer credit scores.
- Low Credit Score - How to tell if you have a low credit score.
- FICO® - What is a FICO credit score?
RMCN Credit Services
1611 Wilmeth Road, Suite B
McKinney TX 75069
(972) 529-0900 Office (972) 562-0225 Fax
Toll Free (888) 4-MY-REPAIR
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